European Factors to Watch-Shares set to fall sharply after China factory contraction

LONDON Aug 21 (Reuters) - European stock futures fell sharply on Friday,
tracking a fall in Asian equity markets and U.S. stock futures, after a survey
showed Chinese factories contracted at their fastest pace since the depth of the
global financial crisis in 2009.

The Caixin/Markit manufacturing index showed activity in China's factory
sector shrank at its fastest pace in almost 6-1/2 years in August as domestic
and export demand dwindled. Coming on the heels of weaker-than-expected data in
July, it stoked fears of a slowdown in the world's second-biggest economy.

U.S. stock futures fell to a 6 month low after the survey, while Japan's
Nikkei stock index fell 3 percent.

The pan-European FTSEurofirst 300 closed near its lowest level
since February on Thursday, and is down over 7 percent since China devalued its
currency last week.

"Global markets are in panic mode as the full scale of China's slowdown
becomes clearer," Angus Nicholson, market analyst at IG, said in a note.

"The word on everyone's lips is deflation - poison for equity markets. The
phenomenal six-year bull market may finally meet its match in China-induced
global deflation."

In the euro zone, Greek Prime Minister Alexis Tsipras resigned on Thursday,
hoping to strengthen his hold on power in snap elections after seven months in
office in which he fought Greece's creditors for a better bailout deal but had
to cave in.

Morale among German consumers declined going into September for the first
time in six months and fell short of expectations amid concern about economic
developments abroad, market research group GfK said.
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